Climate change and natural disasters are severely impacting Pakistan's vital sectors, especially energy and agriculture, and a policy shift is needed to mitigate their impact and spur growth. Rafiullah Kakar, a member of the Development Project at the Ministry of Planning, Development, and Special Initiative, said this while talking to WealthPK. In the agriculture sector, Kakar called for unwinding subsidies and price restrictions, which currently confine the smallholder farmers to a low-value farming system. "These policies also encourage resource-intensive and environmentally damaging production practices. Implementing reforms in this sector is crucial to fostering a more resilient and environmentally sustainable agricultural system," he said. Rafiullah suggested reforms in the energy sector, focusing on achieving financial sustainability, improving distribution efficiency, increasing private participation, reducing the high costs of power generation, and a shift towards the renewable energy sources.

Despite the well-established need for these policy shifts, he acknowledged the challenges of implementing reforms, especially in the face of potential opposition, and suggested that those at the helm should seize the current crisis as an opportunity to institute necessary changes for a brighter and more sustainable future. Highlighting the urgent need for improvement in fiscal management, Kakar warned that debt servicing costs and domestic revenue mobilization were unsustainable, leaving inadequate resources for crucial investments in human development, infrastructure, and climate adaptation. He recommended reforms to enhance the quality of government spending, including cutting regressive subsidies and reducing losses from the inefficient state-owned enterprises (SOEs). He proposed raising more revenue from the affluent through increased progressive taxation and reduced tax exemptions for their environment-unfriendly activities.

Echoing similar concerns, Yong Ye, Country Director of the Asian Development Bank (ADB) in Pakistan, emphasized consistent country policies and uninterrupted reform momentum for addressing the complex economic challenges and achieving effective outcomes from development assistance. He said as a key partner in Pakistan's transformation, the ADB was committed to promoting prosperity, inclusiveness, resilience, and sustainability under its Strategy 2030. Both the World Bank and ADB are urging Pakistan to undertake substantial reforms, setting the stage for a more dynamic, open economy and a sustainable future.

Credit: Independent News Pakistan (INP)